RERA may push up construction costs by 10 per cent

23 May 2017

RERA may push up construction costs by 10 per cent

The Real Estate (Regulation and Development) Act (RERA), aimed at offering protection to home buyers, is expected to have a negative impact on home price.
“There will be an increase in price of homes, due to higher compliance and finance cost for the builders after RERA is in force. Initially, we expect a 10 per cent jump in construction costs for builders, which will get passed on to the buyers,” real estate body CREDAI Bengal’s president, Nandu Belani said.
Builders to keep 70 per cent of the collection from sales proceeds in an escrow account, leaving less flexibility for builders to utilise the proceeds in different projects. Consequently, builders say the need for capital would go up, due to the RERA’s provisons. However, builders also welcomed RERA, saying it will eliminate fly-by-night operators and induce credibility.